Bank loans hit 11.7 trillion FCFA as CEMAC economies expand.

According to BEAC’s 2023 activity report, gross loans to customers were up by 10.5%, compared to December 2022. 

It added that commercial banks turned to the interbank market created by BEAC, from where they secured loans to keep financing economic agents in the face of stricter refinancing conditions from the central bank.

BEAC stated that more recently, commercial banks in the zone virtually scrambled for liquidity despite the huge sum of 250 billion FCFA that the Central Bank injected into the economy.

The money that was injected into the system on September 3, BEAC stated further, was an operation that came as banks continued to experience high liquidity demands. 

According to the BEAC report published on September 5, 2024, the entire amount was swiftly absorbed by commercial banks, leaving some unsatisfied.

Barely seven banks requested a total of 423 billion FCFA, leading to an oversubscription rate of nearly 170%. However, BEAC, limited by the available funds, could only provide 250 billion FCFA at an average interest rate of 6.75%. 

This liquidity injection followed a failed attempt by BEAC on September 2, to withdraw 50 billion FCFA from banks through bond issuance, highlighting the significant liquidity needs banks face to support the economy.

The renewed liquidity injections since June 2024 mark a shift after more than a year of suspension, some business operators say.

Previously, BEAC had adopted tighter monetary policies, including reducing refinancing margins for banks and increasing liquidity withdrawals through bond issuance. 

BEAC also raised key interest rates to curb inflationary pressures, which the bank attributes partly to excess liquidity in the system.

Despite these restrictive measures, bank lending in the CEMAC region continued to grow; with BEAC’s 2023 activity report showing that gross loans to customers reached 11.742 trillion FCFA, up by 10.5% compared to December 2022. 

Banks turned to the interbank market for loans to keep financing economic agents in the face of stricter refinancing conditions from the central bank.

In recent months, inflationary pressures in the region have also eased. This has prompted BEAC to relax its policies, resuming liquidity injections in June 2024. Over time, the amount made available to banks has increased from barely 50 billion FCFA to a whopping 250 billion FCFA. 

The Governor of the Central Bank, Yvon Sana Bangu, assures that meeting these liquidity needs is expected to help the CEMAC region achieve its projected growth rate of 3.6% in 2024, the highest in a decade.

This article was first published in The Guardian Post issue N0:3227 of Thursday September 12, 2024